Armenia’s economy has undergone a profound transformation since independence. Sustained growth, ambitious reforms, as well as inflows of capital and remittances have created a market-oriented environment. However, the global financial crisis impacted significantly the market of the country.
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Armenia's energy sector has
achieved a level of electricity reliability, service quality
and efficiency of sector operations that stands out among
countries participating... Show More + in Commonwealth of Independent
States (CIS). Much of this can be attributed to a decade of
regulatory reform including a long-standing commitment to
cost-recovery tariffs. The study is structured as follows:
section one provides definitions of the key terms used and a
background on the current tariff setting process in Armenia.
Section two indicates how far tariffs have departed from
cost-recovery levels and what costs have not been covered as
a result. Section three describes how new investments will
affect the average cost of service and the average
residential tariff. Section four proposes a marginal
cost-based tariff structure and explains why this differs
from the current tariff structure. Section five discusses
the poverty and social impact of tariff increases needed to
cover new investments in 2021. Section six identifies
options for subsidization and mitigating rate shock that
will help transition to higher, marginal cost-based tariffs.
Finally, section seven summarizes conclusions and
recommendations of the analysis. Show Less -